The World Capital Markets’ Perception of Sustainability and the Impact of the Financial Crisis

Using a unique dataset provided by the international rating agency GES^®, we investigate the effects of corporate sustainability and industry-related exposure to environmental and social risks on the market value of MSCI World firms. The results show a negative relationship in the earlier years of our sample period. However, the analysis reveals that the capital market perception of sustainability has changed owing to the financial crisis. Looking at the height of the crisis in September 2008, the month in which Lehman Brothers shocked the world’s capital markets by filing for Chapter 11 bankruptcy protection, we find that the previously negative perception of corporate sustainability across its various dimensions was positively affected and offset. In addition, as a moderated regression analysis shows, the crisis led to a positive perception of corporate sustainability in industries that are exposed to higher environmental and social risks. Our study has the practical implication that executives, in particular in industries with high environmental and social risks, should increase their commitment to corporate sustainability due to the changes in the institutional setting triggered by the financial crisis.     

Environmental and Economic Dimensions of Sustainability and Price Effects on Consumer Responses

The lack of attention to sustainability, as a concept with multiple dimensions, has presented a developmental gap in green marketing literature, sustainability, and marketing literature for decades. Based on the established premise of customer–corporate (C–C) identification, in which consumers respond favorably to companies with corporate social responsibility initiatives that they identify with, we propose that consumers would respond similarly to companies with sustainability initiatives. We postulate that consumers care about protecting and preserving favorable economic environments (an economic dimension of sustainability) as much as they care about natural environments. Thus, we investigate how two sustainability dimensions (i.e., environmental and economic) and price can influence consumer responses. Using an experimental method, we demonstrate that consumers favor sustainability in both dimensions by giving positive evaluations of the company and purchase intent. In addition, consumers respond more negatively to poor company sustainability than to high company sustainability. In comparison, consumers respond more negatively to the company’s poor commitment to caring for the environment than to the company’s poor commitment to economic sustainability. We also find that consumers do not respond favorably to low prices when they have information about the firm’s poor environmental sustainability. Finally, we find support for an interaction effect between consumer support for sustainability and corporate sustainability; that is, consumers evaluate a company more favorably if the company shares the consumers’ social causes. Overall, we conclude, from our empirical study, support for the idea that consumers do respond to multiple dimensions of sustainability.     

Visualizing CSR: A visual framing analysis of US multinational companies

The aim of this research study is to investigate how different levels of corporate social responsibility are visually framed through corporate publications used in marketing communications. Photographs used as visual marketing communication tools in the annual and sustainability reports of top American multinational companies that practice and promote measures of corporate social responsibility were analyzed. Findings indicate the corporations overall emphasize environmental sustainability efforts and visually communicate their practices through depictions of employees while other social responsibility efforts are often communicated through depictions of consumers. A discussion on the patterns of visual frames that communicate corporate social responsibility and the impact of visuals on organizational identity, brand image, and reputation are offered.     

Local green finance policies and corporate ESG performance

Based on China's government-business relations theory, we use difference-in-differences and causal forest to find that local green finance policies can significantly enhance corporate ESG performance especially for nonstate-owned companies, companies with high levels of executive social capital, non-heavily polluting companies, and companies in developed regions. We also find that the corporate financing constraint mitigation effect and the regional environmental regulation effect of local green finance policies are important mechanisms for promoting corporate ESG performance. Additionally, local green finance policies can strengthen the positive role of corporate ESG performance in enhancing corporate value, which is conducive to corporate sustainability.     

Business Cases and Corporate Engagement with Sustainability: Differentiating Ethical Motivations

This paper explores links between different ethical motivations and kinds of corporate social responsibility (CSR) activities to distinguish between different types of business cases with regard to sustainability. The design of CSR and corporate sustainability can be based on different ethical foundations and motivations. This paper draws on the framework of Roberts (Organization 10:249–265, 2003) which distinguishes four different ethical management versions of CSR. The first two ethical motivations are driven either by a reactionary concern for the short-term financial interests of the business, or reputational, driven by a narcissistic concern to protect the firm’s image. The third responsible motivation works from the inside-out and seeks to embed social and environmental concerns within the firm’s performance management systems, and the fourth, a collaborative motivation, works to bring the outside in and seeks to go beyond the boundaries of the firm to create a dialogue with those who are vulnerable to the unintended consequences of corporate conduct. Management activities based on these different ethical motivations to CSR and sustainability result in different operational activities for corporations working towards sustainability and thus have very different effects on how the company’s economic performance is influenced. Assuming that corporate managers are concerned about creating business cases for their companies to survive and prosper in the long term, this paper raises the question of how different ethical motivations for designing CSR and corporate sustainability relate to the creation of different business cases. The paper concludes by distinguishing four different kinds of business cases with regard to sustainability: reactionary and reputational business cases of sustainability, and responsible and collaborative business cases for sustainability.     

Supply Chain Specific? Understanding the Patchy Success of Ethical Sourcing Initiatives

As a number of high profile companies have found to their cost, corporate reputations can be significantly affected by firms' management of sustainability issue, including those that are outside their direct control, such as the environmental and social impacts of their supply networks. This paper begins by examining the relationship between corporate social responsibility, reputation, and supply network conditions. It then looks at the effectiveness of one tool for managing supply network sustainability issues, ethical sourcing codes of conduct, by examining how the characteristics of three supply networks branded clothes, DIY wood products and branded confectionary affects the implementation ethical sourcing codes of conduct. It ends by setting out conclusions on why implementation of such codes has been so much more successful in some sectors than others and recommendations on effective approaches to managing sustainability issues in supply networks.     

Corporate sustainability in action

Recent developments in management have highlighted the need for research on corporate sustainability strategies at the value chain level and in particular in the context of franchising. Although franchising is a widespread phenomenon, there is little empirical evidence of how companies approach the issue. By employing a multi-method research approach, this study explores the importance that franchisors assign to sustainability and the way they deal with it. Our findings show that franchisors adopt three main different sustainability strategies, with an increasing relevance of social sustainability as an enabler of environmental sustainability. The study sheds some light also on the interplay between the franchisor–franchisee relationship features and the company's approach toward sustainability. Preliminary propositions are presented as a starting point for further research in this area.     

Instrumental and Integrative Logics in Business Sustainability

Prior research on sustainability in business often assumes that decisions on social and environmental investments are made for instrumental reasons, which points to causal relationships between corporate financial performance and corporate social and environmental commitment. In other words, social or environmental commitment should predict higher financial performance. The theoretical premise of sustainability, however, is based on a systems perspective, which implies a tighter integration between corporate financial performance and corporate commitment to social and environmental issues. In this paper, we describe the important theoretical differences between an instrumental and integrative logic in managing business sustainability. We test the presence of each logic using data from 738 firms over 13 years and find evidence of integrative logic applied in business.     

Corporate communication,sustainability, and social media: It's not easy (really) being green

This empirical research explores how 16 global corporations from four different industry sectors—retail, technology equipment, food/beverage/tobacco, and consumer goods—use social media platforms and corporate social responsibility (CSR) reports to communicate about sustainability. Facebook, Twitter, CEO letters from annual reports and CSR/sustainability reports, and other company documentation are examined to compare the content and scope of these firms’ corporate communication. The sample is divided into two subsamples (Green and Not Green firms) using Newsweek's Greenest Company 2012 rankings, and compared for differential use of social media and corporate reports. Results show that communication varies across firm and industry regarding types of sustainability initiatives reported, metrics employed, and communication media utilized, and that Green firms are more active than Not Green firms both in addressing sustainability and in general social media activity. Implications are discussed herein and recommendations are presented for companies seeking to better understand the effective use of social media and sustainability communication.     

Sustainability assurance and cost of capital: Does assurance impact on credibility of corporate social responsibility information?

This paper aims to examine the credibility value of sustainability assurance and the type of assurance provider on cost of capital. A large sample of international companies from the period 2007–2014 was used to develop our models of analysis. We find a greater decrease in cost of capital for companies that publish and assure their social and environmental reports. Thus, voluntary sustainability disclosures decrease the cost of capital. However, companies also have the opportunity to reinforce this decrease by providing an assurance statement, so increasing the credibility of corporate social responsibility information. In addition, the decrease in the cost of capital is significantly higher when such assurance is provided by a top‐tier accountancy firm instead of by engineering or consultancy firms; this result supports also the reputational capital of accountancy firms.     

Chief executive officer ability and corporate environmental sustainability information disclosure

This study explores the impact of CEO ability on corporate environmental sustainability information disclosure. We take samples from Chinese A-share listed companies from 2010 to 2019 and use the ordinary least squares as a baseline regression model to check the relationship between CEO ability and corporate environmental sustainability information disclosure. Our findings are robust to different corporate environmental sustainability information disclosure measures and CEO ability. We found a positive association between CEO ability and corporate environmental sustainability information disclosure; thus, firms with a more able CEO are more likely to disclose more corporate environmental sustainability information. Our results also found a significant negative interaction coefficient between CEO ability and CEO career concerns. As the CEO grows older, his/her ability decreases; therefore, corporate environmental sustainability information disclosure reduces. Furthermore, we document that a female CEO strengthens the relationship between CEO ability and corporate environmental sustainability information disclosure. The study results are important for understanding corporate environmental responsibility development and implementation, particularly in China.     

Which Dimension of Corporate Social Responsibility is a Value Driver in the Oil and Gas Industry?

The oil and gas (O&G) industry suffers from a negative perception of poor sustainability. O&G companies are therefore engaged in several socially sustainable activities related to community development and environmental protection. This article determines whether the social, environmental, and economic dimensions of corporate social responsibility (CSR) are equally value‐additive to O&G companies. We measure the company‐specific level of CSR activities from the information provided in the annual financial reports of O&G companies and determine the effects of CSR dimensions on firm value. We find that CSR enhances firm value of O&G companies. While social activities such as employee well‐being and community development are key value‐drivers, environmental and economic sustainable activities have an insignificant impact on the market value of O&G companies. Copyright © 2018 ASAC. Published by John Wiley & Sons, Ltd     

The Sustainability Balanced Scorecard: A Systematic Review of Architectures

The increasing strategic importance of environmental, social and ethical issues as well as related performance measures has spurred interest in corporate sustainability performance measurement and management systems. This paper focuses on the balanced scorecard (BSC), a performance measurement and management system aiming at balancing financial and non-financial as well as short and long-term measures. Modifications to the original BSC which explicitly consider environmental, social or ethical issues are often referred to as sustainability balanced scorecards (SBSCs). There is much scholarly discussion about SBSC architecture and how it can be designed to relate performance dimensions, strategic objectives and the logical links among these elements. To synthesise the widely scattered research findings and publications on the SBSC, we conducted a thematic analysis based on a systematic literature review containing 69 relevant articles spanning a period of two decades. We found that sustainability-oriented modifications of the BSC architecture are motivated by instrumental, social/political or normative theoretical perspectives. Moreover, these modifications can be mapped with a typology of generic SBSC architectures. The first dimension of the typology describes the hierarchy between performance perspectives and strategic objectives and how it is related to the organisational value system. The second dimension describes how sustainability-related strategic objectives are integrated into SBSC performance perspectives and how this is related to corporate sustainability strategy. This study contributes to the development of the emerging SBSC literature and practice and, more generally, to research on corporate sustainability performance measurement and management. We conclude with a research agenda and implications for management.     

Beyond the Bounded Instrumentality in Current Corporate Sustainability Research: Toward an Inclusive Notion of Profitability

We argue that the majority of the current approaches in research on corporate sustainability are inconsistent with the notion of sustainable development. By defining the notion of instrumentality in the context of corporate sustainability through three conceptual principles we show that current approaches are rooted in a bounded notion of instrumentality which establishes a systematic a priori predominance of economic organizational outcomes over environmental and social aspects. We propose an inclusive notion of profitability that reflects the return on all forms of environmental, social, and economic capital used by a firm. This inclusive notion of corporate profitability helps to redefine corporate profitability as if sustainability matters in that it overcomes the bounded instrumentality that impairs current research on corporate sustainability. We apply this notion to different car manufacturers and develop conceptual implications for future research on corporate sustainability.     

Culture’s effects on corporate sustainability practices: A multi-domain and multi-level view

With a triple-bottom-line lens on sustainability, this study examines the effects of culture on companies’ economic, social, and environmental sustainability practices. Drawing on institutional theory and project GLOBE, we delineate cultural practices dimensions that consistently predict sustainability practices related to each of the three domains. Based on a sample of 1924 companies in 36 countries and nine cultural clusters, we find that future orientation, gender egalitarianism, uncertainty avoidance, and power distance practices positively, and performance orientation practices negatively, predict corporate sustainability practices. Further, our findings suggest that these effects might vary according to the country vis-à-vis cluster level of analysis.     

Bridging the gap: How sustainable development can help companies create shareholder value and improve financial performance

This study examines the effect of integrating sustainability into corporate strategy on various aspects of shareholder value creation and financial performance in the British capital market. The employed method is based on the content analysis of corporate disclosures and a new technique for assessing the adoption of the corporate sustainability concept (embracing the environmental, social, and financial aspects of a company's policies at the same time). Using extensive data of FTSE 350 firms covering the years 2006–2012, 65 companies were selected as meeting corporate sustainability criteria. For the above period, we find that these firms were characterized by higher financial risk exposure, lower asset growth rates, lower BV/MV ratios, lower EVA ratios, and higher MVA ratios. Such relations were generally present among different size and industry groupings. The results support the thesis that firms that incorporate sustainability issues into their business operations are better able to leverage their resources toward stronger financial performance and shareholder value creation than other companies. The paper contributes to the literature by offering a more holistic approach to corporate sustainable performance measurement and shedding additional light on its relation to financial performance in the context of the recent global financial crisis and its direct aftermath.     

CEO facial masculinity,fraud, and ESG: Evidence from South Korea

Researchers in finance and accounting find that male CEOs' high facial masculinity (fWHR: facial width-to-height ratio), which is known to be related to aggressiveness to achieve higher social status in the neuroendocrinology literature, shows dual impacts on corporate outcomes. For example, firms led by more masculine-faced CEOs have better financial performance (ROA) but are more likely to have a higher likelihood of financial misreporting. The harnessing of the strong achievement drive of masculine-faced CEOs to minimize potentially adverse corporate outcomes is of primary concern. We hypothesize that a well-designed environmental, social, and governance (ESG) practice could serve this purpose. Using a sample of South Korean public companies from 1998 to 2015, we find supporting evidence that a one-standard-deviation increase in fWHR is associated with a three-fold higher likelihood of corporate fraud and that the association is attenuated for firms with stronger ESG performance that includes voluntarily disclosing sustainability reports, holding less cash, and incentivizing with stock options.     

Recognizing Ethical Issues: An Examination of Practicing Industry Accountants and Accounting Students

The academic debate why and how companies are dealing with sustainability is dominated by two main arguments—the profit-seeking and the legitimacy-seeking view. While the first argues that companies (only) establish sustainability management measures if this helps to increase their economic success, others emphasize that companies predominantly react on societal pressure dealing with sustainability (only) to secure legitimacy. Whereas both lines of argument have gained a lot of attention in academia, little is known about their relative importance in shaping corporate practice. This papers aims to fill this gap with an empirical analysis of corporate practices of large companies in ten countries worldwide. To capture the organizations’ rationale in sustainability management practice, we systematically applied various measures related to actors and operational activities focusing on the companies’ intention to pursue sustainability management, the integration of sustainability management to the core business, and the actual implementation of related measures. Overall the findings indicate that seeking legitimacy dominates corporate sustainability management practices.     

Corporate sustainability efforts and e-WOM intentions in social platforms

Abstract

The current study adopts service dominant logic to examine how consumers react to social platforms that communicate corporate sustainability efforts. The results suggest a positive connection between corporate sustainability efforts and evaluation of e-service quality as well as between corporate sustainability efforts and e-WOM. We also find that corporate sustainability efforts encourage consumers to spread positive e-WOM on a platform that provides useful information and that is well-designed. This study extends our understanding of corporate sustainability efforts by applying service dominant logic toward an explanation of consumer evaluation and e-WOM.     

Environmental Costs and Responsibilities Resulting from Oil Exploitation in Developing Countries: The Case of the Niger Delta of Nigeria

Interest shown on the environmental impact of operations of multinational enterprises in developing countries has grown significantly recently, and has fuelled a heated public policy debate. In particular, there has been interest in the environmental degradation of host communities and nations resulting from the operations of multinational oil companies in developing countries. This article examines the issue of environmental costs and responsibilities resulting from oil exploitation and production in the Niger Delta region of Nigeria. The case study is based, in part, upon series of interviews with key stakeholders in the Nigerian oil industry. The article further examines the implications of the current practice and policies of multinational oil companies with respect to environmental impact of oil exploitation. The study’s findings illustrates that it is becoming increasingly apparent to oil companies that pollution prevention pays while pollution does not and under pressure from stakeholder groups, oil companies now routinely incorporate environmental impact assessments into their corporate strategy.Dr Gabriel Eweje is a lecturer in Management and International Business at College of Business, Massey University, Auckland Campus, New Zealand. Previously, he worked as a Research Fellow at the United Nations University, Institute of Advanced Studies (UNU/IAS), Tokyo, Japan, and taught at Royal Holloway University of London, England. His PhD from University of London focused on Corporate Social Responsibility and Activities of Multinational Oil and Mining companies in Developing Countries. He also worked as a Research Fellow with International Institute for Environment and Development (IIED), London on a project on how mining and minerals can contribute to sustainable development (MMSD). His research interest lies around the issues of business ethics, corporate social responsibility and sustainability related disciplines.